Industry

 

Performance in 2017

According to the provisional performance figures;

a.      Gross premium written in 2017 was 675Bn up from 582Bn in 2016 signifying 16% growth.

b.      Life insurance accounted for 25% of the Gross premium written in 2017 at 169Bn signifying 28% growth from 2016

c.       General Insurance accounted for 75% of gross premium written at 506Bn and grew by 13%.

d.      Over 2017, Insurers paid 220Bn in claims signifying a growth of 13% from 196Bn paid in 2016.

 

*Performance figures comprises of premiums written by only life insurance companies and general insurance companies and excludes Health Management Organisation premiums.

 

Industry composition

In 2018, the IRA licensed 29 Insurance companies (20 non-life or general insurance companies and 9 Life companies), 1 Micro Insurance Company,1 National Reinsurance Company, 6 HMO’s, 35 Insurance brokers and 21 Loss Assessors.

 

Regulation

  • The Insurance Act 2017 commenced in March, 2018. Of note:

i.            Supervision will shift from Compliance Based to Risk based Supervision.

ii.            Perpetual licensing will be introduced.

iii.            Alternative distribution channels were also provided for.

iv.            Cash and carry business is now part of the law. This now means that an individual/company has to have paid full premium in order to be covered/insured.

v.            An ombudsman has also been provided for to resolve insurance related disputes.

  • With the amendments to the Financial Institutions Act which, among others now allows for bancassurance (the selling of insurance products through the bank channel), the bancassurance regulations were passed on 14th July 2017.  The IRA also provided guidelines with respect to the removal of the requirement for the agency agreement with 3 non-life and 2 Life insurers per bank. The guidelines also stressed the importance of the banks complying with the Bank of Uganda Consumer Protection Guidelines and ensuring that all insurance products are approved by the IRA. The guidelines are scheduled for review in September, 2018.  By |May 2018, ten banks had been licensed.
  • The Local content Bill 2017 is also under discussion.  Whereas the Insurance sector agrees with the spirit and objective of the Bill, the definition of Ugandan and Resident company as well as sections prioritizing a Ugandan company and restricting a Resident company to sub- contracts (Ugandan companies are also given first priority and subcontracts are limited to 30% and 15% for works under bundled contracts) automatically exclude the industry from participation in projects and works covered by the Bill. We are lobbying for the inclusion of insurance given the value and relevance of insurance services that locally licensed insurance companies are in position to provide to the projects/works/activities covered by the Bill.
  • Similarly, the Retirement Benefits Reform Bill is still undergoing discussion and we are lobbying to ensure that the provision recognizing the role of insurance companies in fund management remains in the Bill as well as for this Bill to be passed.
  • In the spirit of East African Community integration, an EAC Insurance Bill is under development by the Partner states. It envisions to be a framework law on which the national laws will consequently be aligned to. The Bill is based on the EAC Insurance Policy which was adopted by the partner states.

Other bills currently under discussion: Motor Third Party Insurance Law Cap.214, Workers Compensation Act 2000.

 

Developments in the market

The Uganda Insurers Association officially launched the sector’s 10 year Market Growth and Development Plan which intends to see insurance penetration grow from less than 1% to 3% by 2025 in March 2017. The Plan intends to bring about increased penetration through streamlining a series of actions and activities under four key intervention areas; increased understanding and appreciation of insurance, lobbying and advocacy, leveraging on technology and capacity building.  The Association will work with players who include her members, the Insurance Institute of Uganda, the Insurance Regulatory Authority, Government and her agencies and other private sector partners to implement this plan.

 

In terms of other developments, although we experienced minimal overall growth in 2016-at 4%- in 2017, we expect to grow between 6-8% particularly due to changes brought about in the FY 2017/2018 as relate to Motor Third Party Insurance, Marine Insurance and Agriculture Insurance.

 

It is now a requirement to check for Motor Third Party Insurance as part of the mandatory vehicle inspection checks being carried out by SGS Automotive Uganda (SGS) which should see compliance with this insurance rise in turn boosting both premium and tax revenue collection for the country.

 

The government has committed to continue with the pilot Uganda Agriculture Insurance Subsidy (UAIS) program to further subsidize agriculture insurance premiums for both small and large scale farm so as to guarantee the returns expected from crop and livestock farming in 2017. Utilization of the subsidy is UGX 1.9 BN as at 31st October 2017 and projected to UGX 3.2 BN by the end of the Financial Year. The uptake of the subsidy has been distributed throughout the country with the average region being 12 BN in exposure and covers crops, livestock and fisheries. By the end of October 2017, UGX 4.2 BN had been written in premium with an end year projection of UGX 6 BN. The current notified claims as at August 2017 amounted to UGX 2 BN for the period from January 2017. The Subsidy currently covers 44,704 farmers.

 

With respect to Marine Insurance, the Insurance Regulatory Authority of Uganda has been mandated to administratively enforce and implement the provisions in the Insurance Act that makes it mandatory that insurance policies on ships, aircraft or other vehicles registered in Uganda; and on goods imported from other countries, except personal effects and donations be issued by Insurance Companies licensed under the Act. We believe that once implemented, this will be a game changer for insurance in general.

 

The IRA also approved the Oil and Gas Co-Insurance syndicate in 2016 allowing the local industry to actively seek avenues to provide insurance support to our nascent Oil and Gas sector.  The engagement with the Oil and Gas sector is on-going.